Key points:

German defence spending set to represent 1.26 per cent of economic output

"There is no debt account at NATO," Ms von der Leyen said in a statement, adding that it was wrong to link the alliance's target for members to spend 2 per cent of their economic output on defence by 2024 solely to NATO.

"Defence spending also goes into UN peacekeeping missions, into our European missions and into our contribution to the fight against IS terrorism," Ms von der Leyen said.

She said everyone wanted the burden to be shared fairly and for that to happen it was necessary to have a "modern security concept" that included a modern NATO but also a European defence union and investment in the United Nations.

Mr Trump made the declaration on Twitter on Saturday — a day after meeting German Chancellor Angela Merkel in Washington — that Germany "owes vast sums of money to NATO".

Mr Trump has urged Germany and other NATO members to accelerate efforts to meet NATO's defence spending target.

German defence spending is set to rise by 1.4 billion euros to 38.5 billion euros in 2018 — a figure that is projected to represent 1.26 per cent of economic output, Finance Minister Wolfgang Schaeuble has said.

In 2016, Germany's spending ratio stood at 1.18 per cent.

During her trip to Washington, Ms Merkel reiterated Germany's commitment to the 2 per cent military spending goal. However, the visit was marked by an awkward moment in which Mr Trump refused a handshake with Ms Merkel.

Smoother sailing for Tillerson in China

Meanwhile, foreign relations were smoother for Mr Trump's Secretary of State Rex Tillerson on his visit to China, the first by a senior member of the Trump administration.

Even a tweet from Mr Trump criticising China the night before Mr Tillerson landed in Beijing did not, at least in public, create any discord.

As Mr Tillerson wrapped up his visit on Sunday, Chinese President Xi Jinping praised his "active efforts" in making a smooth transition of the US-China relationship to the Trump era.